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ENERGY

What would Germany do if Russia cuts off the gas supply?

Germany and France are preparing for a cut in Russian gas deliveries, France's economy minister said Thursday, as Russian President Vladimir Putin warned Moscow will turn off the taps for those who refuse to pay in rubles.

German Economics Minister Robert Habeck and French Business Minister Bruno Le Maire
German Economics Minister Robert Habeck (Greens) and French Business Minister Bruno Le Maire meet in Berlin to discuss European energy policy on March 31st, 2022. Photo: picture alliance/dpa | Bernd von Jutrczenka

“On the sanctions against Russia, we will not accept the payment of gas in any other currency than stated in the contract,” said Bruno Le Maire following talks in Berlin with his German counterpart Robert Habeck.

“There could be a situation tomorrow in which … there is no longer any Russian gas. It’s up to us to prepare for these scenarios and we are preparing,” he said.

Separately, German Chancellor Olaf Scholz said on Thursday that Western countries would continue paying for Russian gas in euros or dollars despite the Kremlin’s threat to cut off supplies not paid for in rubles.

“We looked at the contracts for the gas deliveries,” Scholz told reporters in Berlin.

“They say that payments are made in euros, sometimes in dollars… and I made clear in my conversation with the Russian president that that will remain the case,” referring to a telephone call with Putin on Wednesday.

It came as Putin signed a decree that said buyers “must open ruble accounts in Russian banks” from Friday.

“Nobody sells us anything for free, and we are not going to do charity either – that is, existing contracts will be stopped,” he said.

The order signed by Putin means foreign buyers of Russian gas will have to open an account at Gazprom bank and transfer euros or US dollars into it, reported the BBC.

The bank will then use the currency to buy rubles which will then be used to make the payment for gas.

‘Emergency gas plan’

On Wednesday, Economy and Climate Minister Habeck said that Germany had triggered the first “early warning” alert level under its emergency gas plan. 

He said it was a precautionary measure to prepare for any supply restrictions.

READ ALSO: Germany activates emergency gas plan to secure supply

However, the government also urged households and businesses to cut back on gas as much as possible. 

Habeck said that if deliveries from Russia stopped there would be “serious” consequences although supplies would continue to flow. 

“We are in a situation where every kilowatt-hour saved helps,” Habeck said on Wednesday, urging consumers to limit gas usage.

“You’re helping Germany, you’re helping Ukraine when you reduce your use of gas, or energy in general.”

READ ALSO: Why Germany has urged households and businesses to cut back on gas

What happens if Russia stops energy supplies?

Germany’s Economy Affairs and Climate Action Ministry says that for the coming weeks and summer, thanks to the precautionary measures already taken, Germany could function without gas from Russia.

But in order to guarantee supplies in the coming winter, more measures will have to be taken. 

“The more that is consumed in spring and summer, the more difficult the situation will be in winter,” said the ministry.

“Conversely, the more energy we save now, the better we will get through the winter.”

The ministry said once again: “Therefore, every gas consumer is required to save as much energy as possible.”

Since the outbreak of the war, Germany has been trying to diversify its supplies and accelerating investments in renewable energy to get away from its heavy reliance on Russian gas. 

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ENERGY

Should tenants in Germany be shielded from energy price hikes?

Gas prices have more than tripled in the past year, prompting tenants' rights advocates to call for more social support and a cap on energy costs.

Should tenants in Germany be shielded from energy price hikes?

The German’s Tenants’ Association is calling on the government to put together a new energy relief package to help renters deal with spiralling energy costs.

Gas has become an increasing scarce resource in Germany, with the Economics Ministry raising the alert level recently after Russia docked supplies by 60 percent.

The continued supply issues have caused prices to skyrocket. According to the German import prices published on Thursday, natural gas was three times as expensive in May 2022 as it was in May a year ago.

In light of the exploding prices, the German Tenants’ Association is putting the government under pressure to offer greater relief for renters.

READ ALSO: 

Proposals on the table include a moratorium on terminating tenancy agreements and a permanent heating cost subsidy for all low-income households.

The Tenants’ Association has argued that nobody should face eviction for being unable to cope with soaring bills and is urging the government to adjust housing benefits in line with the higher prices. 

Gas price cap

Renters’ advocates have also joined a chorus of people advocating for a cap on consumer gas prices to prevent costs from rising indefinitely.

Recently, Frank Bsirske, a member of the parliamentary Green Party and former head of the trade union Verdi, spoke out in favour of capping prices. Bavaria’s economics minister and Lower Saxony’s energy minister have also advocated for a gas price cap in the past. 

According to the tenants’ association, the vast majority of tenants use gas for heating and are directly affected by recent price increases.

At the G7 summit in Bavaria this week, leaders of the developed nations discussed plans for a coordinated cut in oil prices to prevent Russia from reaping the rewards of the energy crisis. 

In an initiative spearheaded by the US, the group of rich nations agreed to task ministers will developing a proposal that would see consumer countries refusing to pay more than a set price for oil imports from Russia.

READ ALSO: Germany and G7 to ‘develop a price cap’ on Russian oil

A gas price cap would likely be carried out on a more national level, with the government regulating how much of their costs energy companies can pass onto consumers. 

Strict contract laws preventing sudden price hikes mean that tenants in Germany are unlikely to feel the full force of the rising gas prices this year

However, the Tenant’s Association pointed out that, if there is a significant reduction in gas imports, the Federal Network Agency could activate an emergency clause known as the price adjustment clause.

This would allow gas suppliers to pass on higher prices to their customers at short notice. 

The Tenants’ Association has warned that the consequences of an immediate market price adjustment, if it happens, should be legally regulated and socially cushioned.

In the case of the price adjustment clause being activated, the government would have to regulate the costs that companies were allowed to pass onto consumers to prevent social upheaval. 

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